Two million: jobless total at highest since 1997

The grim scale of the jobless toll in London was revealed as it was confirmed that the national unemployment total has passed the two million mark for the first time since 1997.

Although that landmark was widely expected, economists said they were shocked by the "truly awful" acceleration in the number of people signing on for the £60.50-a-week Jobseeker's Allowance.

The national total soared by a record 138,400 last month from January - the biggest monthly increase since records began in 1971 and worse than any single month in the early Eighties and early Nineties recessions.

The official figures show the devastating impact of the recession in London with the number of redundant workers now relying on benefits rocketing by 57,391 - or 43 per cent - to 189,930 over the past 12 months.

They also reveal that the biggest leaps in the number of people signing on are in the wealthier outer boroughs hit hardest by the City fall-out, rather than in poor inner city areas where unemployment is traditionally higher.

In Richmond upon Thames and Kingston on Thames the number of people on the dole has almost doubled in a year, while in Harrow the figure has surged by two thirds. The data shows how hard London has been hit by the meltdown in the City since the collapse of investment bank Lehman Brothers last September. Of the 44,000 jobs lost to the London economy over the past year, 41,000 were in the grouping that includes "finance and business services."

Leading London business figures called on Gordon Brown to do more to help. Baroness Valentine, chief executive of business group London First, said: "Government must lead from the front in setting up apprenticeship schemes in Whitehall. We need new investment in productive infrastructure, such as electrification of the outer London rail line."

Nationally the number of redundant workers signing on has hit 1.391million, the highest level since January 1998.

The number classed as "unemployed" rose 165,000 to 2.03million, or 6.5 per cent of the working population, in the three months to January, according to the Office for National Statistics. The number of unemployed in London dropped slightly from 308,000 to 307,000.

The figures today sparked accusations that the Chancellor was "running scared" because he is not taking part in a major Commons debate on the economy, and is instead represented by Treasury chief secretary Yvette Cooper. Shadow chancellor George Osborne said: "On a day when unemployment hits two million, the Turner report is published and we read that the International Monetary Fund thinks Britain will have the longest recession of any major economy, I find it extraordinary that Alistair Darling is not prepared to defend the Government's policies in the House of Commons. Most people will conclude that the Government is running away from the debate because they know they are losing it."

TUC general secretary Brendan Barber said: "This is another milestone in the return of mass unemployment to the UK and it will get worse before it gets better."

Labour market economist David Blanchflower, who sits on the Bank of England's interest-rate-setting committee, said: "These numbers are truly terrible. We need to do something about it." City economists also said they were aghast as the pace of the increase in unemployment, which has been fuelled by massive waves of redundancies from major companies.

Howard Archer of City forecasters IHS Global Insight said: "The data are truly awful. Unemployment... seems set to head up towards three million pretty rapidly over the coming months."

He said he expected unemployment to peak at around 3.3 per cent by early 2011. There was little optimism that the impact of the first recession for 18 years would start to ease soon.

Alan Tomlinson, a partner at insolvency specialists Tomlinsons, said: "I have been an insolvency practitioner since the Eighties and have never been so busy. Companies of all sizes and in all sectors are folding by the day. The CBI's prediction last month that unemployment will peak at just over three million in the second quarter of 2010 could prove to be wildly optimistic."

Despite the jobs carnage in the private sector, separate official figures released today showed the numbers employed in the public sector rose by 15,000 to 5.783million in the last three months of last year.